July 6, 2001

Mr. Ralph Nader
P.O. Box 19312
Washington, D.C. 20036

Dear Mr. Nader:

I am writing in response to the letter from you and your colleagues requesting that the Department of Health and Human Services (HHS) grant the World Health Organization (WHO) and other international bodies the right to manufacture and sell pharmaceutical products based on patents held by or produced from research sponsored by the National Institutes of Health (NIH).

As you know, I have just returned from leading the U.S. Delegation to the 54th World Health Assembly, where I had a chance to meet with many of my fellow health ministers. I would like to emphasize to you, as I did to them, that my colleagues in the Bush Administration and I are fully committed to pursuing effective strategies to help the developing world deal with the HIV/AIDS pandemic and related diseases.; The economic and social conditions in sub-Saharan Africa and elsewhere in the developing world, including extreme poverty, lack of medical infrastructure, and the burden of infectious disease, require us to develop new solutions.

As an important part of our response to this crisis, President Bush on May 11 announced his support for a multilateral, global infectious disease fund and pledged a contribution o $200 million in FY 2002. The fund President Bush and the United Nations Secretary-General Kofi Annan agreed to back would be a multilateral, international public-private partnership to provide grants for prevention, care and treatment, and associated health infrastructure development focused on fighting HIV/AIDS, malaria, and tuberculosis. The goal of the efforts to support integrated plans to strengthen public health delivery systems in Africa and elsewhere that could include prevention of new infections, care for the sick, provision of drugs, training of medical professionals, and necessary associated systems support.

We at HHS focus our international efforts to combat these diseases on supporting research that may lead to novel therapies, drug regimens and prevention strategies, including vaccines and microbicides; ensuring these therapies and strategies are safe and effective; and assisting nations to establish AIDS services. In all of these areas, the United States has been the world leader, and we are the largest single donor to UNAIDS and the largest contributor to international HIV/AIDS treatment and prevention programs. We at HHS work closely with other Government agencies in our efforts, and I am pleased to be playing an important role in the formation of the global fund the President has announced.

Since the time you wrote to the then-Director of NIH, Dr. Harold Varmus, on the issue of intellectual property derived from federally sponsored or funded research, there have been a number of significant changes benefitting patients in sub-Saharan Africa and elsewhere. As you note in your letter, these include the very substantial reductions in the cost of drugs offered by pharmaceutical companies. In addition, the U.S. Trade Representative, Ambassador Robert Zoellick, has stated his agency is not considering a change in the present flexible approach to health-related intellectual property issues. While this is a start, I strongly believe the need remains to establish the critical healthcare infrastructure, including laboratory and clinical capabilities, to permit appropriate education, training and distribution of medicines in a manner that can minimize drug resistance and potential serious side effects.

I am uncertain how permitting WHO, UNICEF and other international organizations to use “U.S. government rights in patents on medicines and other health care inventions,” as you request in your letter, will advance the agenda of helping developing nations respond to epidemic infectious disease. The massive challenges nations in sub-Saharan Africa and elsewhere face in containing the spread of HIV.AIDS, tuberculosis, and malaria are not created by patent systems or by patents, and solutions do not lie in the area of patent policy.

Federally sponsored or funded research, such as that provided by NIH, advances basic scientific knowledge, supports clinical research and clinical trials, and sometimes creates promising new leads for new pharmaceutical products and treatments, but it does not support the actual production of medicines. Many significant barriers, including additional research and regulatory oversight, must be overcome in order to convert a promising lead into a safe and effective new pharmaceutical product. In almost all cases, the private sector – not the U.S. Government or its funded research institutions – carries out this difficult and time-consuming task.

HS will rarely be the sole entity that holds patets on a pharmaceutical product in the form in which its actually marketed, HHS generally holds the patents on methods and early stage technologies that may be a part of a final product, but not to the final product itself. In therapeutic drug development, a federally owned (or funded) technology might be an essential or ancillary ingredient of a product, but is usually not the only technology required in producing the final product. Private sector entities often independently patent the subsequent innovations necessary to develop and commercially manufacture a pharmaceutical product. Our partners are under no obligation to transfer rights to HHS under these subsequent patents. Simply stated, the U.S. Government cannot transfer rights it does not own.

I should note that even if the Government-owned inventions were to be of immediate use in the marketplace as complete therapies, NIH has not filed for patent protection in most developing countries, including sub-Saharan Africa. Thus, NIH patent rights are not at issue in these countries and there is no need for HHS to license those rights. To WHO or other third parties for an entity to begin producing those compounds there in accordance with international law.

As Dr. Varmus informed you two years ago, NIH and WHO have worked together in the past on licensing joint inventions and in negotiations with third parties. He further noted that WO declined to undertake the manufacture of vaccines important to developing countries because of resource limitations.

You also requested that we write provisions in license agreements for technologies that have benefited from Federal funding to ensure international organizations may use foreign patent rights on these inventions, as provided for under the Bayh-Dole Act of 1980. Again, U.S. Government intellectual property interests, where we have them, are in the technologies developed under Federal support, not in the final marketed product. Under Bayh-Dole, the Federal Government has no authority to require terms, such as the ones you propose, in existing licenses executed by grantees and contractors. The Federal non-exclusive license gives the U.S. Government the non-exclusive, non-transferable, irrevocable, paid-up right to practice or have practiced for or on behalf of the United States, the subject invention throughout the world. Such licenses would not extend to non-governmental organizations, companies,or countries for their own purposes.

Licensing policies under Bayh-Dole and similar legislation were created for the explicit purpose of facilitating the commercialization of inventions arising out of publicly funded research. By any standard, they have achieved their goals. Synergistic partnerships among universities, the Federal Government, and the private sector have been instrumental in helping many new products reach consumers. Medical breakthroughs, such as the recent approval of Gleevec, a new drug to treat chronic myeloid leukemia, rely in part on the ability of entrepreneurs to make calculated risks by investing in the costly process of bringing to market products based on inventions discovered here at HHS and at our funded research institutions.

Our experience demonstrates that licensing condition like the one you suggest will reduce the commercial feasibility of developing new pharmaceutical products and related technologies from federally funded research. If HHS were to impose such terms, especially after a product has been developed, we would eliminate the incentive of the private sector to partner with us. Whether imposed prospectively or retroactively, conditions on patent licenses as you suggest would materially impair the value of such licenses and would deter the private sector from attempting to commercialize inventions underwritten by HHS research or grants. Such a course of action would lead to fewer innovative medicines and therapies reaching patients around the world.

I appreciate your thoughts on this important matter. I commend you for your commitment to the cause of broadening access to medicines for patients in the developing world and for your willingness to suggest new avenues to pursue this goal. I continue to believe, however, that our current policies provide the right balance between encouraging innovation in producing new therapies and increasing access to existing drugs.

Sincerely,

Tommy G. Thompson